In June 2017, an Investor Buys a Put Option on Genentech

question 49

Multiple Choice

In June 2017, an investor buys a put option on Genentech stock with an exercise price of $75 and expiring in January 2019.If the stock price in July 2017 is $80, then this option is

• A)in-the-money.
• B)out-of-the-money.
• C)a LEAPS option.
• D)out-of-the-money and a LEAPS option.

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Definitions:

Nonnegotiable

Nonnegotiable refers to something that cannot be negotiated or altered, such as a fixed term in a contract or a financial instrument with terms that cannot be changed.

Without Recourse

This refers to a provision in an agreement that exempts the seller from liability or obligation to the buyer in case of some failure on the part of the products or services sold.

Negotiability

Refers to the feature of a financial instrument which allows it to be transferred from one party to another in a legal manner, typically without endorsement or delivery.

Blank Indorsement

A signature by the holder on the back of a negotiable instrument, such as a check, without specifying a particular endorsee, thereby making the instrument payable to the bearer.